Report of the week

This week was busy. I did a diagnostic for a distribution company. Their goal is to double their business. They know they have many opportunities for improvement, but they do not know where to start to achieve their goal.

When we are not at the top of our efficiency and we plan on doubling our business, it means that we will quadruple the problems! If the business doubles, will we really double the profits with all these problems? Most likely not.

It is best to improve efficiency first. I made several diagnoses in the past year. The purpose of this kind of intervention is to know where to start, prioritizing. Because we only have 2 arms and 1 head, and with every day life to manage, we cannot improve everything at the same time.

You want to know how I proceed? Well, I ask questions to understand the company, its challenges, its strengths, its weaknesses, etc. I like to do a general mapping, from the receipt of an order to the delivery of an order, to understand what is happening in the company, who does what, how, why and when. And then I look at what happens, spend time with the staff to identify problems and opportunities. I ask questions. I then quantify everything.

I discuss my findings with management throughout the process, to validate what I see. Finally, I prepare a report to document what we discussed. When I give the report to my client, there is no surprise! We have already discussed it.

In this distribution company, what is to be improved and what are the priorities? A major challenge is the management team’s lack of experience. Supervisors have a hard time prioritizing, mobilizing people and addressing issues. The turnover rate is high among employees. Therefore, one point to work on is supervisor management coaching.

A second challenge is at the picking level. Employees walk a lot, for many reasons.  For example, product location is wrong, so they are always looking for products. Sometimes some employees do not put the material in the right place or they do not bother to pick up the items in the picking location.  They put them in overstock locations because it’s easier (because the material is not in the right place), so instead of looking, they go in the overstock, it’s faster.

How to solve this problem? By managing employees, having picker-level goals, and communicating what’s important and why. It all comes back to management coaching.

Finally, the equipment. There are great opportunities to reduce efficiency losses. There are several pallets on the ground, which prevents access to the pallets in the racking. Every day they have to move several palettes to access other ones. There are dozens of pallets of dead stock, which is not selling or has been kept for a long time. It needs to get rid of, given away, sold at a discount or thrown away. It also requires more pallet racking.  That way, there will be no pallets on the ground, and double, triple and quadruple handling pallets will be eliminated.

This summarizes the diagnostic very quickly with some examples, although there are many other improvements to make.

By the way, business diagnostics can be subsidized in part by Emploi Québec. So, what are you waiting for to identify and prioritize opportunities for improvement in your business?If you think this story might inspire other Business Owners to improve their processes, I invite you to forward them this email. Thank you!

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